I wrote yesterday about Debbie Wasserman Schultz, a Democratic congresswoman from Florida and chair of the Democratic National Committee, who epitomizes the fake populism that the Democratic party has long been good at espousing to mask their pro-corporate agenda. She has joined with the Republicans to attack and undermine the Consumer Financial Protection Bureau (CFPB), a new agency that was created as a result of the efforts of senator Elizabeth Warren to protect consumers.
This news report shows how she has taken aim at a proposed law to curb payday lenders’ usurious practices, sparking a rebuke from Warren.
Payday lenders are those who provide instant loans to people who are in desperate need of cash to cover emergencies and have nowhere else to go. That is not in itself a bad thing though it illustrates the need for some mechanism to help people in such situations. The problem is that these lenders charge exorbitant rates of interest and they give the loans to people who have no hope of paying it back out of their earnings and thus the borrowers take out new loans to cover the old and before they know it they are hopelessly in deep debt even after they have repaid much more than what they originally borrowed.
New legislation proposed by the CFPB would require the lenders to check if the borrowers had a realistic chance of repaying their initial debt. But Wasserman Schultz, who gets a lot of money from the payday lenders, is actively working against it.
Rep. Debbie Wasserman Schultz (D-Fla.), the chair of the Democratic National Committee, is co-sponsoring a bill along with several other Florida lawmakers that would water down a forthcoming effort to regulate payday lenders, whose high-interest loans, consumer advocates say, often trap the poor in a cycle of debt. The Floridians want the federal government to instead use an approach tried in their state, which consumer advocates say has done little to protect borrowers.
According to an outline of the yet-to-be-released CFPB regulations, the agency’s goal is to prevent a situation in which consumers take out a single payday loan, then find themselves unable to repay it, leading them to take out a series of additional loans and piling up more and more debt. Among other steps, lenders would be required to assess up front whether borrowers will be capable of repaying the loan.
The bill backed by Wasserman Schultz would delay the new regulations for two years. And it would exempt from the regulations any state with its own payday lending law similar to one passed by Florida in 2001. That law was backed by the payday lending industry and described by supporters as a compromise approach. As a state lawmaker, Wasserman Schultz helped push it through.
Wasserman Schultz has taken in more than $68,000 from the payday lending industry, according to the Center for Responsive Politics — more than all but 18 members of Congress. [My emphasis-MS]
Wasserman Schultz is now facing a real primary challenge from a true progressive Tim Canova and I hope she loses, though the big money interests in the Democratic party, including president Obama, will all come out in support of her.